TITLE:
Incentivizing Criteria for Steering the Implementation of Gas Distribution Investment Projects
AUTHORS:
Massimo Beccarello, Giacomo Di Foggia
KEYWORDS:
Natural Gas Distribution, CBA, Investment Projects, Italy
JOURNAL NAME:
Modern Economy,
Vol.14 No.2,
February
6,
2023
ABSTRACT: Natural gas distribution involves delivering gas to
end customers via local low-pressure pipelines and is a public service. As part
of the procedure for awarding the gas distribution service, contracting
authorities define the scope of programmatic guidelines whereas firms
participating in the open bidding process propose development plans through
which they propose investment projects typically classified into extensions,
upgrades, and maintenance development plans. According to the scale and scope
of development plans, such investment projects must undergo, or are exempt
from, a cost-benefit analysis. The criteria for classifying investment projects
are called development conditions. This paper focuses on such criteria,
proposing a new methodology aimed at incentivizing investment projects and
simplifying the evaluation process. Results confirm that an improvement can be
made in making development conditions more adequate to the needs of different
territories. Policymakers can benefit from this paper, as investors and
contracting authorities require a common methodology at the heart of the
analysis of gas distribution network extension.